Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation

The Coca-Cola Amatil Ltd (ASX: CCL) share price outperformed on Thursday on speculation that it’s about to make a sizable acquisition.
The post Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation appeared first on Motley Fool Australia. –

Coca-Cola Amatil Ltd <a href=(ASX: CCL) share price fizz” style=”float:left; margin:0 15px 15px 0;” />

The Coca-Cola Amatil Ltd (ASX: CCL) share price outperformed on Thursday on speculation that it’s about to make a sizable acquisition.

The CCL share price jumped 2.8% to a seven-month high of $10.75. In contrast, the S&P/ASX 200 Index (Index:^AXJO) shed 0.3% of its value.

The beverages group may have found favour for its relatively defensive business model during a risk-off day.

After all, the Treasury Wine Estates Ltd (ASX: TWE) share price and Woolworths Group Ltd (ASX: WOW) share price held up better than most.

COVID leaves CCL share price tasting flat

But that’s only a small part of the story. I believe investors got excited on an Australian Financial Review report that CCL is readying to lob a bid for some of Asahi’s assets.

There’s nothing like merger and acquisition (M&A) action to get the blood pumping. Despite selling staple products, the COVID‐19 panic hasn’t played out in CCL’s favour.

A big driver for demand for its drinks come from dine-in consumers. With cafes and restaurants forced only offer takeaway during social restrictions, sales have been as appetising as flat Coke.

Coca-Cola Amatil share price regains fizz on M&A

But Coca-Cola Amatil is hoping to turn its fortunes around with a substantive acquisition. It appears that the group tested the appetite of its biggest shareholders for a capital raising to help fund a possible transaction.

The AFR reported that Macquarie Group Ltd (ASX: MQG) is riding beside Coca-Cola Amatil and would underwrite the sale of new shares.

Coca-Cola Amatil is leaving all options open. It’s considering funding any asset purchase via debt or using a mix of debt and equity.

Asahi acquisition details

The ASX group is one of two known bidders for Asahi’s portfolio, which includes a handful of beer and cider brands. The other keen suitor is reported to be global beer giant Heineken.

Asahi has to divest brands like Stella Artois, Beck’s and Strongbow to get regulatory clearance for its takeover of Carlton & United Breweries.

Will Coca-Cola Amatil undertake a rare capital raise?

Investors don’t get many chances to participate in a capital raise with Coca-Cola Amatil. The group has not sold new shares in decades.

Given that stuck-at-home Aussies are increasing their intake of alcohol to help overcome the worst economic crisis in living memory, I suspect any cap raise by CCL will be well received. This is particularly so in the current environment of cheap money and ample liquidity.

Speaking of which, it will probably be a lot cheaper for Coca-Cola Amatil to use debt to fund any purchases.

This is of course assuming lenders are willing to provide it with more debt. The group is already holding around $1.7 billion in net debt.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited and Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!